Earlier this summer, the Supreme Court voted 6-3 in a ruling that the Biden administration overstepped its authority in 2022 when it announced it would cancel up to $400 billion in student loans.
The ruling impacted as many as 43 million Americans who would have benefitted from the loan forgiveness. Nearly half of those borrowers would have had all of their student loans forgiven, and around 90 percent of the relief would have gone to borrowers making less than $75,000, according to a statement from President Joe Biden in response to the Supreme Court’s ruling.
“It would have been life-changing for millions of Americans and their families. And it would have been good for economic growth, both in the short- and long-term,” Biden said in the statement.
Student loan interest will resume on Sept. 1 while payments will be due in October. Millions of borrowers have not been required to pay student loans since March 2020 because of an emergency pandemic measure.
If you owe any money toward your federal student loans, now is the time to start planning. Some steps to consider before payments resume include locating your student loan servicer, contacting your servicer, and considering an income-driven repayment plan.
While student loan payments were paused, the company that manages your student loans may have changed. If you are unaware of who your student loan provider is, you can find your servicer by logging into StudentAid.gov. It’s also worthwhile to contact your servicer to ask how much you might owe when payments resume, and to see what payment plans are available to you.
Shortly after the Supreme Court’s decision, the Biden administration introduced the Saving on a Valuable Education (SAVE) plan. This form of repayment is income-driven and will cut borrowers’ monthly payments in half, allow many borrowers to make $0 monthly payments, save all other borrowers at $1,000 per year, and ensure borrowers don’t see their balances grow from unpaid interest, accord- ing to the White House.
One aspect of the SAVE plan includes forgiven loan balances after 10 years of payments, rather than 20 years, for borrowers with original loan balances of $12,000 or less. Student borrowers in repayment are eligible for the SAVE plan, and those who sign up or are already signed up for the current Revised Pay as You Earn plan will be automatically enrolled in SAVE. Those interested in the SAVE plan can learn more by visiting the Department of Education’s website.
Student loan debt in the United States sits at $1.774 trillion, according to Education Data Initiative, a research agency that collects data and statistics about the country’s education system. The average federal student loan debt balance is $37,717, and the average public university student borrows $25,969 for a bachelor’s degree, according to Education Data Initiative.
